DST 1031 Exchange Example Case Study: Diversification Matters

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By: Betty Friant, Senior Vice President

Recently a 1031 Exchange client, who was already working with another registered representative on his Exchange, reached out to Kay Properties to receive a second opinion on his 1031 exchange DST selection. This client had started to invest the entire amount from the sale of his property into one single DST. After discussing with his wife how at Kay Properties we believe diversifying among multiple DST offerings and sponsors to be important, she suggested that diversification would make sense for them. As a result, we reviewed diversifying across many variables:

  • Geographic location to potentially lower the risk of concentration of any particular area of the country having economic problems, weather and climate issues, etc.
  • Asset classes such as multifamily, medical office, single tenant net lease retail, industrial, etc.
  • Tenants so that the leases were the obligation of multiple companies across multiple industries.

In the end, this client decided to diversify into multiple DST properties, as he and his wife were just not comfortable with the advice from the other registered representative and the concentration risk that a single DST property may pose.

But taking the time to really listen to the needs of the clients, we at Kay Properties try to understand what is important for each individual’s situation and then to respond to the client by focusing on what is important to them and to ultimately help our clients move in the direction that is right for them. We don’t just sell to our clients. We listen. We understand. We advise.

Diversification does not guarantee returns and does not protect against loss. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please be aware that this material cannot and does not replace the Memorandum and is qualified in its entirety by the Memorandum.

This material is not intended as tax or legal advice so please do speak with your attorney and CPA prior to considering an investment. This material contains information that has been obtained from sources believed to be reliable. However, Kay Properties and Investments, LLC, WealthForge Securities, LLC and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) and 1031 Exchange properties. These include, but are not limited to, tenant vacancies, declining market values, potential loss of entire investment principal.

Past performance is not a guarantee of future results: potential cash flow, potential returns, and potential appreciation are not guaranteed in any way and adverse tax consequences can take effect. Real estate is typically an illiquid investment. Please read carefully the Memorandum and/or investment prospectus in its entirety before making an investment decision. Please pay careful attention to the “Risk” section of the PPM/Prospectus.

IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, you should consult your tax and legal professional for details regarding your situation. Securities offered through registered representatives of WealthForge Securities, LLC, Member FINRA / SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities.

DST 1031 properties are only available to accredited investors (generally described as having a net worth of over one million dollars exclusive of primary residence) and accredited entities only (generally described as an entity owned entirely by accredited individuals and/or an entity with gross assets of greater than five million dollars). If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney prior to considering an investment. You may be required to verify your status as an accredited investor.

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